Evening Post THURSDAY, SEPTEMBER 5, 1940.

Evening Post, Volume CXXX, Issue 58, 5 September 1940, Page 10

Evening Post THURSDAY, SEPTEMBER 5, 1940.

THE WELFARE OF ALL

The Prime Minister's opening address to the economic conference yesterday set out the basic problems with which New Zealand is confronted. The conference has been summoned for the purpose of seeking a solution. How far it will succeed will depend principally upon the ability of sectional representatives to put aside preconceived ideas and examine new methods of solution. Sectional interests must be harmonised by the substitution of co-operation for conflict, for no sectional remedy has the remotest prospect of success. It is regrettable, therefore, that the opening discussion sessions of the conference tended to evolve into a debate on worker-employer differences. To be. sure this frank speaking may clear the air, but it will not do much more to prepare the way for a constructive programme. Also it may tend to put the issue in wrong perspective—presenting it as a tussle between employers and workers from which one party or the other may gain something. Nothing could be more erroneous. From a tussle both sides and the whole of New Zealand must emerge as losers. The fact that must be remembered —for it presents the main problem — is that the value of goods which are available for consumption in New Zealand has fallen from about £133,000,000 last year to about £114,000,000. The Prime Minister stated the full import of this when he said: Although the total of goods and services for civil use has decreased by some 14 per cent, the amount of money that is available for spending by individuals, after taking into account increased taxes, is still about the same this year as it was last. A situation like this no doubt means that prices must tend to increase with* the increased pressure of purchasing power on goods to be bought. That, I believe, is the situation with which we are faced today. The situation is an aggravation of the pre-war position of the Dominion, the position that led Mr. Savage to say that New Zealand was not suffering from a shortage of money, but a shortage of goods. It has been aggravated in the first place by the diversion of a considerable force of productive-power to war purposes — thus diminishing the volume of goods for civil consumption— and in the second place by unwillingness to recognise that this must either be made good by increased effort of the remaining producers or must be met by sacrifice equitably spread among consumers. Obviously this involves three separate but related questions: (1) how to increase production; (2) how to distribute equitably the sacrifice necessary if production cannot be sufficiently increased; (3) how to prevent surplus spending power from pressing upon a diminished volume of consumption goods. Attached to each question are several subsidiary, but still important, issues. For instance, if production is raised but only in the same proportion as purchasing power, the problem of surplus purchasing power is untouched. The danger of inflation remains. Again, if production is not of the kind required to meet the civil demand, the immediate relief is les? than if the needed ' goods were brought to the market. Application of labour, capital, and materials in unproductive ways, or ways that have only a deferred productive effect, keeps up the volume of purchasing power but does not add to the goods. Clearly, then, one of the first endeavours must be to transfer labour and capital from such works to works which will produce consumption goods. It is abundantly clear that increased production of the right kind is necessary, and for this harmonious co-operation is essential. It cannot be obtained by an attitude of no surrender. It is equally clear that a more lavish distribution of purchasing power will not help. Indeed, it must prove dangerous. There is no higher wages solution, no simple credit issue remedy. Rather there must, to the extent that more production fails to bridge the 14 per cent, gap, be diversion of spending power from the consumption goods market. To attempt this by more taxation would be dangerous. Already taxation is so heavy as to threaten productive resources by taking the capital that should be applied in main-

taining productive power. Also there is always reluctance to impose taxation in the income area where surplus spending power is creating the most difficulty. Better than taxation is voluntary withholding of spending power by saving. This has been recognised and emphasised for some time, but s the Government has been slow in giving a practical lead by offering inducements to those who will practise thrift.

With greater production of the right kind, and withdrawal of surplus spending power by thrift, cost, wage, and price stability would be possible. But—and this is most important —the' basis must first be made fair. Some considerable sections of the community have been left behind in the upward movement. There can be no reasonable prospect of stability unless their claims are considered. Neither farmers, nor other classes, can be asked to accept a stopping point fixed at random to Stabilise the gains of others more fortunate. There must be recognition in a generous spirit of give-and-take of the necessity for equity as a preparation for the cordial co-operation essential to the welfare of all.